Air France-KLM’s corporate segment revenue remains below pre-pandemic levels but on long-haul routes has reached about 85 percent of 2019 levels, Air France-KLM CFO Steven Zaat said on a Friday earnings call.
“On medium-haul on domestic, it’s more in the range of 75 percent,” Zaat said, adding that despite lower corporate traffic, premium-segment load factor is above 2019 levels.
“On the corporate front, we continue to see a return to normal, but [are] definitely not back to 100 percent, where we have a significant reduction in corporate traffic in place in the French domestic market,” Air France-KLM CEO Benjamin Smith said. “We are pulling capacity as quickly as we can to redeploy that capacity with Transavia to European routes on the transatlantic and the rest of our network, including medium-haul.”
By region, the group highlighted corporate traffic recovery across the North Atlantic “maintained” throughout the first quarter at approximately 75 percent to 80 percent of pre-Covid levels, while performance in Asia and the Middle East was boosted by the January reopening of China.
Short- and medium-haul routes saw “better yield trends,” while a higher load factor helped to offset revenue loss linked to a decrease in capacity. Meanwhile, strong performance in Africa was in line with the previous quarter, driven by West and Central Africa for Air France and by East and South Africa for KLM.
Q1 Metrics
Overall, the company reported strong quarterly ticket sales, increasing 42 percent year over year to €6.3 billion (US$6.9 billion).
Despite seeing positive recovery momentum in Q1, the group posted a net loss of €306 million, which was above market expectations for a loss of €294 million. Consequently, the group’s full-year capacity forecast has been downgraded to 95 percent of pre-pandemic levels, compared with 95 percent to 100 percent previously.
Smith said that Air France-KLM “continued to show strong revenue growth as well as robust cash flow generation thanks to the very encouraging summer ticket sales.”
He added that the airlines’ teams are “actively gearing up” for a busy summer season, echoing recent comments made by Lufthansa and IAG bosses in quarterly earnings reports.
While financial statements did not reference the impact of recent strikes in France, Smith on the call with analysts said, “It takes an enormous amount of effort from our operational teams to mitigate [related] losses.” According to Bloomberg, Smith said the impact of the ongoing labor action is “below €20 million” so far.
Revenue for Air France between January and March came in at €3.9 billion, with a net loss of €181 million, while KLM posted €2.5 billion in revenue, with an operating loss of €128 million. The group noted that the sum of individual airline results does not add up to the total Air France-KLM earnings due to “intercompany eliminations” at the group level.
In the first quarter, Air France-KLM welcomed 19.7 million passengers, a 35.3 percent increase compared with the same period last year. Capacity increased by 19.8 percent and traffic grew by 38.9 percent, while the load factor increased by 11.8 points compared with 2022.
Group passenger unit revenue per available seat kilometer increased by 35.3 percent compared with the same period last year, driven by both load factor and yield.
“Looking ahead, we remain focused on further strengthening our balance sheet and delivering the transformation efforts that will enable us to continue to improve our competitiveness while accelerating our decarbonization efforts,” Smith added.
